Union of South American

Nations (USAN)
Opportunities for Bangladesh

Submitted to
Dr. Syed Ferhat Anwar
Course Instructor: M607 International Marketing
EMBA Program

Submitted by
Name
Roll
Batch
Tanvir Ahsan Siddique
ZR1501007
Pavel
Md. Tanvir Nayem
ZR1501008
Maruf Uz Zaman
ZR1501010

21st
21st
21st

Institute of Business Administration, University of Dhaka

Date: October 30, 2017Institute of Business Administration, University of Dhaka,

Bangladesh

Union of South American Nations

Business Opportunities for Bangladesh

Introduction:

The Union of South American Nations is an intergovernmental regional

organization comprising 12 South American countries. USAN consists of twelve nations and they are
Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and
Venezuela. They have two observer nations as well and they are Mexico and Panama. USAN started its
journey from 23rd may, 2008.
At the Third South American Summit on 8 December 2004, presidents or representatives from 12 South
American nations signed the Cusco Declaration, a two-page statement of intent announcing the
foundation of the South American Community. Panama and Mexico attended the signing ceremony as
observers. The group announced their intention to model the new community after the European Union
including a common currency, parliament, and passport. According to Allan Wagner Tizn, former
Secretary General of the Andean Community, a complete union like that of the EU should be possible by
2019. The mechanics of the new entity came out of the First South American Community of Nations
Heads of State Summit, which was held in Braslia on 2930 September 2005. An important operating
condition of UNASUR is that no new institutions will be created in the first phase, so as not to
increase bureaucracy, and the community will use the existing institutions belonging to the previous trade
blocs. Some information about USAN are

Constitutive Treaty on Effect: 23 May 2008

Secretariat: Quito, Ecuator
Parliament: Cochabamba, Bolivia
Largest City: Sao Paulo, Brazil
Population : 418,175,687
Density: 23.6/km2
Per capita: $15,855 (PPP)

Following are some necessary data regarding the member nations

Country
Population
GDP (Nominal)
HDI
Argentina
43,417,000
15,030
0.797
Bolivia
9,119,152
4,575
0.663
Brazil
204,451,000
11,065
0.718
Chile
16,763,470
14,939
0.805
Colombia
48,219,827
9,091
0.701
Ecuador
13,922,000
8,021
0.720
Guyana
858,863
7,004
0.633
Paraguay
6,158,000
4,710
0.665
Peru
29,180,900
9,107
0.725
Suriname
470,784
8,947
0.680
Uruguay
3,477,779
13,961
0.783
Venezuela
28,199,822
11,726
0.735
We tried to find out sustainable business of Bangladesh with these countries. Few relevant data about
Bangladesh is population 168,957,745, GDP $1,284 and human development index is 0.570.

Current Work in Progress in USAN:

Economic development (The Bank of the South $7 Billion): Presidents of the seven founding countries
(Argentina, Bolivia, Brazil, Ecuador, Paraguay, Venezuela and Uruguay) officially launched the South
American Bank in Buenos Aires in December 2007. The heads of all the founding countries were at the
ceremony, with the exception of President Tabar Vzquez of Uruguay. The capital will be US$7b, with
Venezuela responsible for US$3b and Brazil US$2b. The headquarters will be located in Caracas with
offices in Buenos Aires and La Paz.
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The Bank of the South will finance economic development projects to improve local competitiveness and
to promote the scientific and technological development of the member states. Its founding charter
affirms that the bank will promote projects in a "stable and equal" manner and priorities will be oriented
towards reinforcing South American integration, reducing asymmetries, and promoting an egalitarian
distribution of investments.
The Brazilian Minister, Guido Mantega, stated that the bank is not similar to the International Monetary
Fund; it will be a credit institution similar to the World Bank.
Defense policy:
The South American Defense Council (CDS) was proposed by Venezuela and Brazil to serve as a
mechanism for regional security, promoting military co-operation and regional defense. From the
beginning Brazil, Argentina and Chile, the countries that took the leadership of the project, made clear
that they did not intend to form a NATO-like alliance, but a cooperative security arrangement, enhancing
multilateral military cooperation, promoting confidence and security building measures and fostering
defense industry exchange. Colombia initially refused to join the defense council due to the strong
military ties it has with the United States through the Plan Colombia. However, after reviewing the
proposal they decided to join on 20 July 2008.
Shortly following the signing by Colombia's President, President of Chile Michelle Bachelet appointed a
working group to investigate and draft a plan for the new council. Finally, on 10 March 2009, the 12
nation members held, in Chile, the first meeting of the newly formed council. [31]
In mid-2010, UNASUR played a key role in mediating the 2010 ColombiaVenezuela diplomatic crisis.
On 1 September 2010, the agency "UnasurHait" was created to provide US$100 million in help to Haiti.

Infrastructure cooperation
There is an Initiative for Infrastructure Integration of South America (IIRSA) underway, which has
received the support of the Inter-American Development Bank and the Development Bank of Latin
America.
UNASUR started plans of integration through infrastructure cooperation with the construction of
the Interoceanic Highway, a road that intends to more firmly link the Pacific Coast countries,
especially Chile and Peru with Brazil and Argentina by extending highways through the continent,
allowing better connections to ports from Bolivia and the inner parts of Argentina, Peru, and Brazil. The
first corridor, between Peru and Brazil, began construction in September 2005, financed 60% by Brazil
and 40% by Peru, and was completed in December 2010.
The South American Energy Ring is intended to interconnect Argentina, Brazil, Chile, Paraguay, and
Uruguay with natural gas from several sources, such as the Camisea Gas Project in Peru and Tarija Gas
Deposits in Bolivia. Though this proposal has been signed and ratified, economic and political difficulties
in Argentina and Bolivia have delayed this initiative, and to date, this agreement remains more like a
protocol than an actual project, since Chile and Brazil are already building LNG terminals to import gas
from overseas suppliers.
Free movement of people
Visits by South American citizens to any South American independent country of up to 90 days only
require an identification document issued by the traveler's country. On 24 November 2006, Argentina,
Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, and Uruguay abolished
visa requirements for tourists between any of those nations.
Mercosur, along with its Associate members of Bolivia, Chile, Colombia and Ecuador established that
their territories together form an "area of free residence with the right to work" to all its citizens, with no
additional requirements other than nationality. The Free Movement and Residence Agreement was
established in the Braslia summit based in a previous document signed on 6 December 2002.

Objective:
The main objective of the report is to create sustainable relationship with the USAN trade block.
United Nation has taken some strategies under sustainable development goals they are dignity (to end
poverty), prosperity (to grow sustainable economy), justice (to promote safe and peaceful societies, strong
institutions, partnership (to promote global solidarity), planet (to protect our ecosystem) and people (to
ensure healthy life). We will approach for partnership as we are trying to set up business relation with
these countries with global solidarity.
In this project, we will focus on two goals of UN mission which are:

Prosperity (to grow sustainable economy)

Planet (to protect our ecosystem)

Overview:
We have chosen Brazil primarily to start the journey. The business relationship between Bangladesh &
Brazil properly reestablished since 2010 when the Brazilian embassy reopened in Bangladesh. Currently
Bangladesh is exporting worth of $211.7m to Brazil and Brazil is exporting worth of $1.672b to
Bangladesh. At present Bangladesh is experiencing trade deficit. From 2014 to 2015 Brazil export to
Bangladesh experienced 54% growth. We need to increase our exports to Brazil to bring in more money.
As such we can decrease our trade deficit with Brazil.

How to start with and why:

Brazil has a huge potential market. Brazil imports a lot from other countries. The market is worth of
$241.4 b for imports from other countries. We have chosen Brazil to start trade in USAN block because of
the following advantages

Highest populated country in south America

23rd largest importing economy of the world
7th largest world economy
Total $241.4B value import market
Comparatively closer through the sea ways because of Santos sea port
Brazil is well connected with other countries of the block
High GDP of $15,048 in PPP
Human development index is also High (0.718)

Problem we might face:

Brazils main imports are machinery, chemical products, oil, automotive parts, electronics, electrical and
transport equipment. Brazil has some drawbacks as well such as import or export delays. The bureaucracy
level is also very high there. It takes almost 119 days to start a business. It takes around 469 days to get
fully authorized for business. Port clearance takes a long time of 13 days to clear the product. The
distance from Bangladesh is also very large.

Image: Sea Shipment from Bangladesh to Brazil

Current Business Scenario between Bangladesh & Brazil:

Following is the bilateral business scenario in the recent years. This has been taken from publication of
Dhaka Chamber of Commerce & Industries

Following are the key take outs

Bangladesh export to Brazil $211.7m in last year & import $1.672 b.

Import is 8 times higher

Major import for Bangladesh from Brazil is sugar

Major imports for Brazil from Bangladesh are RMG, Jute & Footwear

At present, Bangladesh is exporting mainly RMG and jute to Brazil. The current market is worth $211.7
million. We are looking for ways to increase it. We will mainly focus on the jute export. Bangladesh is
currently exporting $7.372m worth of jute as yarn and processed jute. We have the ability to meet their
extra demand regarding this sector

Business Focus Areas:

Raw & Processed Jute

Apparel
Pharmaceutical
Sugarcane Agricultural Technology

Export of Raw & Processed Jute:

Bangladesh grows the best quality of jute in the world. Jute grows in Brazil at insignificant quantity. At
present 80% of Brazils jute demand is met by India & 20% by Bangladesh. We can easily grab share
from India and make the Brazilian market of jute much bigger.
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Following is the recent scenario of jute export from Bangladesh to Brazil

Year

Volume (000 USD)

2007

1618

2008

3031
Year

2009
2010

392
2007
3099
2008

59
9311

2011

7372
2009

1209

2010

7221

2011

7840

Connecting
Brazil

Volume (000 USD)

point for Jute Export in

Brazil has an internal market of 7,300 tonnes of jute & jute products

Brazil produces less than 1,000 tonnes of jute

Brazil takes only around 11% of this difference from Bangladesh

Jute sacks and other jute items are bio degradable which connects with SDG UN Mission Planetto protect our ecosystem

Competitive & Comparative advantage of Jute:

Geographical advantage (tropical land which produces premium quality jute)

Efficient labor who has been growing this for decades
Jute rotten process gets easier due to easy availability of water
Readymade factories to prepare processed jute products in jute mills
Because of connectivity of Brazil with other South American countries, Bangladeshi Jute can get
into other countries easily

Export of Generic Pharmaceutical products:

Another potential is the pharmaceutical sector. In 2011, Brazil invested $1.5 b in medicine industry. They
are continuously growing big in this sector. Currently this is the eighth largest industry in the world. 80%
of their medicine is produced by multinational companies. Soon by 2017 it will become the sixth largest
medicine industry in the world. As a generic medicine producer we have a great potential.

Brazil pharmaceutical industry is continuously booming

In 2011, Brazil invested $1.5B in this sector
80% of the medicine which is sold in the Brazilian market are produced by MNC
Eighth largest industry in the medicine, will be the sixth largest in the medicine by 2018
Bangladesh already exports generic medicines to Brazil
Bangladesh can acquire up to $247.2m Import medicine market in Brazil
Via Brazil, Bangladesh can also enter in other markets of South America

Competitive & Comparative advantage (Pharmaceuticals)

We have some competitive & comparative advantages as a country such as

TRIPS patent advantage which allows Bangladesh to export generic products without any patent
fee till 2033. This was decided in Uruguay round.
Bangladesh has a big and efficient pharmaceutical industry which is continuously growing inside
and outside the local border.
Low production cost because of economies of scale

Apparel Export from Bangladesh to Brazil:

Though RMG is the biggest contributor from Bangladesh to Brazil the volume is not significant. Most of
Brazils demand is met by China. Bangladesh can certainly take share from there & get into some other
South American nations through Brazil.

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Competitive & Comparative advantage (Apparel)

More than 3 decades of Experience in the industry.

Efficient and experienced labor.

Low production cost because of economies of scale.

Sugarcane Agricultural Technology:

Moreover, we can get the agricultural technology from Brazil to produce sugarcane and process sugar
confectionery products. The biggest reason behind trade deficit now is the import of sugar from Brazil.
By producing sugar locally we can reduce the trade deficit.
We may get the technology Brazil is using to produce sugarcane
And the process to turn it into sugar and other confectionery items
Thus Bangladesh will be able to reduce the trade deficit with Brazil.
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Conclusion:
South America is a big market for Bangladesh which is almost untapped till now. Bangladesh has a huge
prospect to grow business there. Bangladesh is the producer of best quality jute in the world which they
can export all over USAN. Moreover, this is biodegradable which is good for the plante. Pharmaceutical
and Apparel are yet two more industries from where Bangladesh can establish a sustainable business.
Agricultural technology arrangement of sugarcane from Brazil will help to reduce the trade deficit.

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References:
http://www.jute.org/wjp/cp_brazil.htm
http://www.dhakachamber.com/
https://www.searates.com/reference/portdistance/
https://www.cia.gov/library/publications/the-world-factbook/fields/2147.html
https://esa.un.org/unpd/wpp/Download/Standard/Population/
http://bdnews24.com/bangladesh/2013/07/24/bangladesh-brazil-bonhomie
http://newstoday.com.bd/index.php?option=details&news_id=2441576&date=2016-05-01
http://www.thedailystar.net/news-detail-199520
http://archive.dhakatribune.com/bangladesh/2015/mar/23/tofail-bangladesh-exports-medicines-107countries
https://www.albd.org/index.php/updates/news/1114-pharmaceuticals-a-rapid-growing-export-industry?
lang=en
http://bdnews24.com/business/2016/01/24/pharmaceutical-exports-from-bangladesh-rise-sharply

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